Highlights from Las Vegas

05/23/2003 12:00 am EST

Focus:

The arguments for a bull market - or at least a significant bullish
phase - are hard to disregard. Indeed, the mood in Las Vegas, from both advisors
and investors, was more optimistic than we have seen at Money Shows in several
years. From a contrary standpoint, this one-sidedness towards a bullish
posture may suggest we are nearing a pullback to reduce some of the
excess bullishness. Regardless, it has been a long time since we have read such
bullish reviews of the market, and below, we share some of these optimistic
outlooks.

Chuck Carlson, editor of
DRIP Investor, titles his latest issue,
"Bullish Pieces Falling Into Place." He highlights potential tax relief,
favorable interest rates, low inflation, the relatively positive results in Iraq,
and cheaper oil. His summary: "Where do I come down on this market? I think
the reasons to be bullish out-number the reasons to be bearish. This market has
gone through a tough three years and is due for a bounce. True, stocks may not
be as cheap as they were during previous market bottoms. However, history shows
that waiting for 'rock botttom' prices usually is the wrong approach. Bottom
line- if you have been reluctant to put money into this market, now is the time
to put some investment funds to work in stocks."

Carlson is also a contributing editor to
the 57-year-old Dow Theory Forecasts, edited by Richard Moroney. Dow Theory,
in fact, has a market strategy named after it - under this theory a bull or
bear market is defined by closes above or below a certain level determined by
the market's previous action. He now says, "When an over-bought market
continues to rally, it suggests investors are discounting genuine improvement in
business conditions. With several indicators suggesting the market is due for a
pullback, a near term move above 8931.68 in the Dow would be a bullish
development and confirm the market's primary trend as bullish under Dow
Theory. It would also suggest that any pullbacks should be
viewed as buying opportunities."

"I feel more optimistic now than I have in two years, and believe that the last
ten months have been a cyclical low," says Prudential Securities technical
director Ralph Acampora . "Part of the reason for that
is the new emerging leadership is basically technology. And I believe when
you have growth stocks leading it shows confidence coming back into the market.
If we’re trying to be anticipatory about the next move, I would say that
any market hesitation here is a buying opportunity. Nevertheless, the market is in need of
a near-term correction—a time when the current imbalance between supply and
demand gets re-aligned. This process could take several weeks to complete; in
the meantime, we do not expect the market to make new lows nor do we expect
the intermediate to long- term positive momentum to change—in other words, this
near-term correction is a normal pause within the base formation that began in July.
In fact, the more time this basing process takes, the better it likely is.
Thus, what is happening near-term should actually be very healthy for the market’s
longer term outlook."

"One of the problems that preceded this bear market in 2000 was that as
the market was making new highs the most broadly based of the measuring tools –
the advance-decline line – was getting more and more narrow," says Ralph
Bloch
of Raymond James
& Associates. "That kind of scenario is a recipe for disaster. Think about it. The market
keeps going up, led by fewer and fewer stocks. That cannot continue and it
was the primary technical precursor to the bear market that followed. We now
have the exact opposite situation. Since the October reaction low we have
two sources of leadership. Number one is the advance-decline index. It has outperformed
the Dow in nothing short of spectacular fashion. So we have a
mirror image situation. Breadth lagged at the top; it is now acting very superior into the
bottom. And last, but not far from least, the technology stocks, which is my guidepost
for a healthy stock market – we cannot and will not have a strong
market without technology leadership, and within that area, I give a tremendous amount of
weight to the SOX, which covers the semiconductor industry. So we are
seeing the exact opposite of the bearish conditions and the internal strength of
the market is growing. I would hope to see the market move a little sideways for
a while. The longer the base, the healthier the breakout will be when it
occurs."

"Talk about risk aversion," says fundamentalist Ned
Riley of State Street Global Investors.
"The public’s risk aversion today can be measured in the $800 billion they have put
into savings accounts in the last two years. It can be seen in money market funds. Risk
aversion can be seen in them buying bonds for the future. Now they are not
alone. They are following the lead of the analysts on Wall Street who really don't know
any better. I hate to be this critical, but the majority of those analysts grew up in
the 1990s with the wind at their back, everything was beautiful, and I don’t
think they know how to come out of a bear market, I don’t think they know how to
come out of a recession, I don’t even think they know what cyclical leverage is
in earnings and profits. It’s going to once again be time to buy and hold, and
it's going to be the shorts and traders chasing stocks all the way up the
street."

"

There haven’t been many profit
opportunities over the past three years, but there’s been plenty of opportunity
to lose one’s shirt," notes Jim Stack, editor of InvesTech Market Analyst . "Yet, a critical bullish turning point could be at
hand – as evidenced by key technical models we track. Bear markets typically bottom
in the depths of gloom and despair. What makes this post-bubble
environment different has been the Fed’s most aggressive easing in 89 years of
monetary history. That favorable monetary climate has tempered the pessimism
among seasoned professionals and experienced investors alike. They know
– barring
a deflationary economic implosion –
that eventually the Fed’s easy money policy
should start to work. The stock market is telling us to look past the gloomy
headlines and fundamentals. Our confidence level is slowly, but steadily,
rising."

"I agree with the economists who look at the long-term problems
in the US, like the cost of healthcare, Social Security – that huge, enormous,
off-balance sheet item that we have," says John Dessauer, editor of Investor's World . "Unless these problems
are solved in the next three or four years somewhere between here and there this
economy starts to grow a whole lot more slowly than we would like. But in the
meanwhile, we have a huge opportunity. The perfect storm is coming together. The
dollar is down, interest rates are down, corporate profits have risen for five
consecutive quarters. Corporations are generally lean and mean and any increase
in demand will lead to an increase in profits, which leads to rising stock
prices. Long-term rates are the final piece of the story, and we are going to
see an economic spurt with GDP growth probably on the order of 5% for one year.
If we get that, then all the stocks you can think of to buy are going to make
you money. But make your money on this run, because there are no guarantees that
we will solve the long-term problems."